1) Which of the following is an example of a factor of production?
a.rent
b.interest
c.land
d.Social Security payments
2) Which market structure would likely have the highest concentration ratio?
a.Monopoly
b.Oligopoly
c.Monopolistic competition
d.Perfect competition
3) In the markets for factors of production in the circular-flow diagram,
a.households provide firms with labor, land, and capital.
b.households provide firms with savings for investment.
c.firms provide households with goods and services.
d.firms provide households with revenue.
4) Table 17-2
Imagine a small town in which only two residents, Abby and Brad, own wells that
produce safe drinking water. Each week Abby and Brad work together to decide how
many gallons of water to pump. They bring water to town and sell it at whatever price
the market will bear. To keep things simple, suppose that Abby and Brad can pump as
much water as they want without cost so that the marginal cost is zero. The weekly
town demand schedule and total revenue schedule for water is shown in the table
below:
Refer to Table 17-2. Suppose that Abby and Brad work together to operate as a
profit-maximizing monopolist. How many gallons of water will be produced and sold?
a.4 gallons
b.5 gallons
c.6 gallons
d.8 gallons
5) Table 18-6
Refer to Table 18-6. What is the value for the cell labeled CC?
a.650
b.600
c.100
d.50
6) The U.S. federal government spends its revenues in a number of ways. Rank the
following spending categories from largest to smallest.
a.income security, health, national defense, net interest
b.health, national defense, net interest, income security
c.net interest, health, income security, national defense
d.national defense, income security, net interest, health
7) Production Possibilities for Footville
Which of the following statements is correct?
a.The opportunity cost of an additional 200 shoes is constant at 200 socks.
b.The opportunity cost of an additional 200 shoes is constant at 300 socks.
c.Footville’s production possibilities frontier is a straight, downwardsloping line.
d.The opportunity cost of an additional 200 shoes increases as more socks are produced.
8) If consumers often purchase muffins to eat while they drink their latt©s at local
coffee shops, what would happen to the equilibrium price and quantity of latt©s if the
price of muffins falls?
a.Both the equilibrium price and quantity would increase.
b.Both the equilibrium price and quantity would decrease.
c.The equilibrium price would increase, and the equilibrium quantity would decrease.
d.The equilibrium price would decrease, and the equilibrium quantity would increase.
9) Figure 8-2
The vertical distance between points A and B represents a tax in the market.
The loss of consumer surplus for those buyers of the good who continue to buy it after
the tax is imposed is
a.$0.
b. $1.50.
c.$3.
d. $4.50.
10) AllClean knows that it produces and sells very effective laundry detergent.
NotQuiteWhite knows that it produces and sells ineffective laundry detergent.
According to the signaling theory of advertising,
a.both AllClean and NotQuiteWhite have incentives to spend large amounts of money
on advertising their products.
b.AllClean has an incentive to spend a large amount of money on advertising its
detergent, but NotQuiteWhite does not.
c.NotQuiteWhite has an incentive to spend a large amount of money on advertising its
detergent, but AllClean does not.
d.neither AllClean nor NotQuiteWhite has an incentive to spend a large amount of
money on advertising their detergents.
11) Studies of professional sports teams suggest that, in sports, racial discrimination in
previous decades was
a.rare.
b.common and that owners of teams are largely to blame.
c.common and that customers (fans) are largely to blame.
d.None of the above is correct; there are no reliable studies of discrimination in sports
due to the difficulties inherent in measuring athletes’ productivity.